PARTICIPATION AGREEMENT
THIS AGREEMENT, dated as of October 30, 2003, between the Pitcairn
Funds, a Delaware business trust, on behalf of each of its series listed on
Schedule A hereto, severally and not jointly (each, an "Investing Fund"), and
iShares Trust, a business trust organized under the laws of the State of
Delaware, and iShares, Inc., a corporation organized under the laws of the State
of Delaware, each on behalf of its respective iShares series, severally and not
jointly (each an "iShares Fund" and collectively the "iShares Funds").
WHEREAS, Investing Fund and the iShares Funds each are registered with
the U.S. Securities and Commission ("SEC") as open-end management investment
companies under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, section 12(d)(1)(A) and (B) of the 1940 Act limits the ability
of an investment company to invest in shares of another investment company, and
therefore limits the ability of an Investing Fund to invest in shares of an
iShares Fund;
WHEREAS, iShares Trust and iShares, Inc., on behalf of each iShares
Fund, have obtained an order from the SEC dated April 15, 2003 (the "iShares
Order"), that permits registered investment companies to invest in the iShares
Funds in excess of the limits set forth in section 12(d)(1)(A) and (B) in
accordance with the conditions of the iShares Order and the representations in
the application filed to obtain such Order (the "iShares Application"); and
WHEREAS, the Investing Fund may, from time to time, invest in shares of
one or more iShares Funds in excess of the limitations of section 12(d)(1)(A)
and (B) in reliance on the iShares Order;
NOW THEREFORE, in consideration of the potential benefits to the
Investing Fund and the iShares Funds arising out of the Investing Fund's
investment in iShares Funds, the parties agree as follows.
1. Representations and Obligations of the iShares Funds.
(a) The iShares Funds have provided to the Investing Fund a copy of
the iShares Order and the related SEC Notice of Application for
such Order (attached hereto as Schedule B). The iShares Funds
will promptly provide the Investing Fund with (i) a copy of any
amendments to the iShares Order, and (ii) a copy of the iShares
Application upon request.
(b) In connection with any investment by an Investing Fund in an
iShares Fund, the iShares Fund agrees (i) to comply with the
terms and conditions of the iShares Order and this Agreement,
and (ii) to promptly notify the Investing Fund if such iShares
Fund fails to comply with the terms and conditions of the
iShares Order or this Agreement.
2. Representations and Obligations of the Investing Funds.
(a) Pursuant to Condition 9 of the iShares Order, each Investing
Fund represents that the board of trustees of the Investing
Fund and the Investing Fund's adviser understand the terms and
conditions of the iShares Order and that each agrees to fulfill
its responsibilities under the iShares Order.
(b) Pursuant to Condition 9 of the iShares Order, each Investing
Fund will promptly notify the iShares Funds in writing at the
time of any investment by such Fund in an iShares Fund in
excess of the 3% limit in Section 12(d)(1)(A)(i).
(c) Each Investing Fund will promptly notify the iShares Funds in
writing of any purchase or acquisition of shares of an iShares
Fund that causes such Investing Fund to hold (i) 5% or more of
such iShares Fund's total outstanding voting securities, and
(ii) 10% or more of such iShares Fund's total outstanding
voting securities.
(d) To the extent an Investing Fund holds 10% or more of the total
outstanding voting securities of an iShares Dow Xxxxx Index
Fund, as listed on Schedule A, as amended from time to time,
the Investing Fund agrees to vote its shares in the same
proportion as the vote of all other holders of shares of such
iShares Fund. To the extent an Investing Fund holds 5% or more
of the total outstanding securities of an iShares Fund, other
than an iShares Dow Xxxxx Index Fund, as listed on Schedule A,
the Investing Fund agrees to vote its shares in the same
proportion as the vote of all other holders of shares of such
iShares Fund.
(e) If an Investing Fund exceeds the 5% or 10% limitations in
Sections 12(d)(1)(A)(ii) or (iii), the Investing Fund, as
required by the iShares Application, will disclose in its
prospectus in "Plain English":
(1) That it may invest in exchange-traded funds; and
(2) The unique characteristics of the Investing Fund
investing in exchange-traded funds, including but not
limited to, the basic expense structure and
additional expenses, if any, of investing in
exchange-traded funds.
(f) Each Investing Fund: (i) acknowledges that it has received a
copy of the iShares Order and the related SEC Notice of
Application for such Order; (ii) agrees to adhere to the terms
and conditions of the iShares Order and this Agreement and to
participate in the proposed transactions in a manner that
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addresses the concerns underlying the iShares Order; (iii)
represents that investments in the iShares Funds will be
accomplished in compliance with its investment restrictions and
will be consistent with the investment policies set forth in
its registration statement; (iv) acknowledges that it may rely
on the iShares Order only to invest in iShares Funds and not in
any other investment company, and (v) agrees to promptly notify
the iShares Funds if it fails to comply with the iShares Order
or this Agreement.
3. Indemnification.
Each Investing Fund agrees to hold harmless and indemnify the
iShares Funds, including any principals, directors or trustees,
officers, employees and agents, against and from any and all
losses, expenses or liabilities incurred by or claims or
actions ("Claims") asserted against the iShares Funds,
including any principals, directors or trustees, officers,
employees and agents, to the extent such Claims result from (i)
a violation or alleged violation by the Investing Fund of any
provision of this Agreement or (ii) a violation or alleged
violation by the Investing Fund of the terms and conditions of
the iShares Order, such indemnification to include any
reasonable counsel fees and expenses incurred in connection
with investigating and/or defending such Claims.
The iShares Funds agree to hold harmless and indemnify an
Investing Fund, including any directors or trustees, officers,
employees and agents, against and from any Claims asserted
against the Investing Fund, including any directors or
trustees, officers, employees and agents, to the extent such
Claims result from (i) a violation or alleged violation by the
iShares Fund of any provision of this Agreement or (ii) a
violation or alleged violation by the iShares Fund of the
terms and conditions of the iShares Order, such indemnification
to include any reasonable counsel fees and expenses incurred
in connection with investigating and/or defending such Claims.
4. Notices.
(a) All notices shall be in writing and shall be delivered by
registered or overnight mail, facsimile, or electronic mail to
the address for each party specified below (which address may
be changed from time to time by written notice to the other
party).
If to the Investing Fund:
Xxxxx X. Xxxx III
Pitcairn Investment Management
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Email: xx0000@xxxxxxxx.xxx
With a copy to: Legal Department
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If to the iShares Funds:
Xxxxx Xxxxxxx
U.S. Legal Group
Barclays Global Investors, N.A.
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Email: xxxxx.xxxxxxx@xxxxxxxxxxxxxx.xxx
With a copy to:
Xxxxx Xxxxx
U.S. Compliance Group
Barclays Global Investors, N.A.
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Email: xxxxxxxxxxxxxxx@xxxxxxxxxxxxxx.xxx
4. Termination; Governing Law.
(a) This Agreement will continue until terminated in writing
by either party upon sixty (60) days' written notice to the
other party. This Agreement may not be assigned by either
party without the prior written consent of the other.
(b) This Agreement will be governed by Delaware law without
regard to choice of law principles.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PITCAIRN FUNDS (on behalf of each of its series listed on Exhibit A, severally
and not jointly)
-----------------------
Name: Xxxxx X. Xxxx III
Title: President and Chief Executive Officer
ISHARES INC., on
behalf of each of its series
------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary and Treasurer
ISHARES TRUST, on
behalf of each of its series
------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary and Treasurer
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Schedule A
List of Pitcairn Funds
Diversified Growth Fund
Diversified Value Fund
Select Growth Fund
Select Value Fund
Small Cap Fund
Family Heritage(R)Fund
International Equity Fund
Taxable Bond Fund
Tax-Exempt Bond Fund
List of iShares Dow Xxxxx Funds
Dow Xxxxx U.S. Telecommunications Sector Index Fund (IYZ)
Dow Xxxxx U.S. Utilities Sector Index Fund (IDU)
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